SOUTH WEST OF ENGLAND REGIONAL DEVELOPMENT AGENCY
(RDA) RESPONSE TO THE REGIONAL ASSEMBLY’S (RA) SELECT
COMMITTEE’S INITIAL QUESTIONS ON BUSINESS SUPPORT
OCTOBER 2003
Introduction
This document aims to respond as fully but concisely as possible to the Assembly’s
initial questions to provide a basic broad-brush understanding of what the Agency is
aiming to achieve in the area of integrated business support.
In keeping with the terms of reference, some important areas of business support such
as skills and inward investment are given less attention in this response.
The Agency’s commitment to integrated and cross-directorate working is designed to
give the best possible response to the issues facing the region’s business. It does
however mean that the answers given often apply to more than one question, and that
therefore the document needs to read as a whole.
We look forward to an opportunity to respond later to more detailed questions from
the committee.
Bill Price
Deputy Director, Enterprise & Innovation
October 2003
1. It would be helpful to know what the SW RDA believes are strategic objectives
for business in the South West and how these assist in meeting broader economic
objectives. An explanation of how the SW RDA meets these and what it sees as its
role and the role of other organisations in doing so would be helpful.
Answer (incorporating essential context)
1.
PRINCIPAL ISSUES
During the last 4 years the RDA has undertaken significant research on the economy
of the South West and the principal issues facing the business community. The
principal issues include :
• Skills shortages in certain sectors
• Peripherality of the region in terms of markets and customers
• Challenges of remoteness, especially for rural businesses and those in the far
South West
• Diversity of the business base, both in terms of size and sector (95% of
businesses in the South West employ fewer than 10 people)
• Tightness of the labour market in North & East of the region
• Access to finance for young and growth businesses
• Perceived lack of aspiration, entrepreneurial activity and a culture of enterprise
• A continued decline in manufacturing
2.
RDA’s ROLE IN SUPPORTING BUSINESS
The Agency’s most important role is to improve the long-term economic success of
the region. In aiming to improve long-term economic prosperity and inclusion in the
South West, we work closely with key partners and the business community in order
to improve competitiveness and productivity across the region. This work continues
to grow and develop.
Business competitiveness and economic development has to be balanced alongside
environmental and social aspects within the region to ensure that we achieve both
viable and sustainable objectives. We support the work of others who take the lead in
these areas by:
o exercising strategic leadership
o promoting the needs of the South West
o ensuring a strong voice for the region in Government and Europe.
Leadership is provided through:
o the RDA’s Board (which includes significant business representation)
o the RDA’s Executive, in particular Caroline Bull, Director of Enterprise &
Innovation, and her senior management team.
We promote the needs of the region’s businesses by responding to important policy
initiatives such as the House of Lords recent enquiry into the UK’s Science,
Engineering and Technology base.
We provide a strong voice by:
o lobbying (for example over the impact of Foot & Mouth Disease and the need
for better transport links to remove constraints to business growth)
o and by membership of key European networks such as EURADA (which
brings together regional development agencies for the purpose of sharing
learning and disseminating best practice) and the Innovation Relay Centres
(IRCs), discussed as a case study in Answer 7 below.
3.
OUR PARTNER ORGANISATIONS
We work with partner organisations at both a strategic and local level. In addition to
the RA, our key partners in supporting business across the region include:
• the private sector
• business sector groups
• regional Higher Education Institutes (HEIs) and Further Education Colleges
• Sub-Regional Partnerships
• Local Authorities
• Government Office for the South West (GOSW)
• Small Business Service (SBS)/Business Links (BLs)
• Trade Partners UK (SW)
• Learning & Skills Councils
• Public Sector Research Establishments
• South West Manufacturing Advisory Service
• business representative organisations – e.g. CBI, FSB, Chambers of Commerce,
IoD
• Regional Infrastructure for Social Enterprise
• voluntary sector
• South West TUC
We have engaged with all of these organisations at a strategic level and they have
been closely involved in the consultations on the relevant parts of the RES and the
Corporate Plan.
We deliver our main programmes and projects in formal or informal collaboration
with these partners, including measures to allow businesses to start up, grow and
prosper. Compared to the size of the regional economy, we have limited total
resources (£93 million in 2002/2003), not all of which can be devoted to business
support. We invest where we have identified a clear need and where we can add most
value to sustainable economic productivity and prosperity.
We work with key partners in the public and private sector on a project-by-project
basis.
Public Sector Examples
•
•
SBS – a concordat underpins formal and informal relationships across all levels of
both organisations. SWRDA and SBS (SW) are collaborating on regional pilots
for joint working in the Business Support arena in the region;
The BL network and RDA are working on five major regional collaborative
initiatives to support policy areas including:
• Management Development and Coaching
• International Trade
• Sector Development
• Innovation and Technology Transfer
• Access to Finance (Investor Readiness/Business Angels).
Public/Private Sector Examples
•
•
•
•
Support for Manufacturing – the RDA has played a leading role in setting up the
SW Manufacturing Advisory Service and provides funding to support a £2.7m, 3
year programme that runs initially to 2005. A further £1m has been allocated this
year to further develop the scope and depth of support to SME manufacturing
businesses over the period of the current Corporate Plan. This service is delivered
with private (Engineering Employers’ Federation) and public (BLs, HEIs) partners
and has endorsement from CBI, IoD & FSB;
Access to Finance - we sponsor a £25m Regional Venture Capital Fund to provide
risk finance for all growth businesses in the region. The Fund is managed and
delivered by an independent private sector Fund Manager;
Sector Development – on behalf of the region we have identified eight regionally
significant sectors and provide funding to support industry-led sector initiatives to
improve skills and competitiveness within businesses in these sectors - projected
funding 2002-2006 - £27m;
PRIME (SW)– the South West RDA supports this initiative to help the over 50’s
set up their own businesses in partnership with Age Concern, DTI & Lloyds TSB
– current funding £50k pa.
Other organisations are also involved in implementing our strategy. As well as
industry engagement through our support for sectors, we are building links with the
top 250 strategically important companies based in the region through a co-ordinated
aftercare programme. This helps to engage them in policy design and to enable us to
work more effectively (from a position of knowledge) with other professional bodies
and trade associations.
4.
THE BUSINESS SUPPORT STRATEGIC OBJECTIVE AND
HOW THE AGENCY MEETS IT
Strategic Objective 1 of the RDA’s Corporate Plan is:
o To Raise Business Productivity.
There is a clear route from the aims and objectives of the Regional Economic Strategy
as they relate to business, through to the policy initiatives articulated in the RDA
Corporate Plan, and hence to specific projects and action.
More specifically, the Themes and RDA Activity supporting this strategic objective
and detailed in the Corporate Plan are:
Theme*
RDA Activity
Business
Growth
o Support the development of key sectors
o Encourage increased exports/international trade by South
West companies
o Promote the development of regional and local supply chains
o Attract and retain domestic and foreign direct investment into
the region
o Support business growth through access to appropriate
finance and advice
Sites &
Premises
o Develop incubators and science parks to support the
exploitation of regional research
o Ensure regionally significant sites are bought forward
o
Ensure that there is a range of workspace to support the needs
of developing companies
o Undertake key activities to encourage innovation in business
o Increase the rate of knowledge transfer between further and
higher education, public sector research establishment and
business
Innovation
*NB: Skills & Learning has already been the subject of scrutiny and has therefore
been excluded from this table.
The RDA has led or co-led the development of a number of focused regional
strategies and plans to drive forward action to promote these themes, including those
for:• Finance for Business
• Incubation & Science Parks
• Sites & Premises
• Innovation
• Regional ICT
• Enterprise - (draft - includes business start-up)
• Development plans for each of the priority sectors
• International Trade
These strategies and plans outline why, how and where we as a region should
prioritise our intervention.
Innovation - Examples
The Agency is committed to embedding a culture of innovation within business
sectors and local communities across the region. We work with others to identify and
overcome the barriers to adopting innovation, and promote and encourage initiatives
to strengthen the skills and capabilities in all sectors of business (priority business
sectors, public sector, education, research organisations and the voluntary sector) to
innovate and respond to competitive pressures.
Investment and Finance – Finance for Business - Examples
Working with national and regional partners, including SBS, DTI, the European
Investment Bank, and South West Ventures Ltd, the Agency has helped to launch a
Regional Venture Capital Fund, which now has £25m available for investment in
eligible regional companies. The Agency has also worked with Objective 1 partners
in Cornwall to help establish three funds totalling £20m for investment in Cornish
manufacturing businesses.
A South West Finance for Business Strategy was launched in December 2002,
outlining why and how the RDA will address the barriers to growth caused by access
to finance. Policy initiatives will flow from this to support manufacturers seeking
finance to grow. Specific areas include• SWAIN (South West Angels and Investment Network) – a network to improve
supply of/access to informal equity;
• Early growth funding;
• Mentoring;
• Investor readiness.
ICT - Examples
The South West region is gaining a reputation as a good base for entrepreneurs who
need top-quality electronic networks.
In addition to taking the lead in strategy development, the RDA is supporting
initiatives to enable business access to high-speed broadband connection. For
example, we have committed nearly £1m to the £12.5m, three year ACT NOW
(Access for Cornwall through Telecommunications to New Opportunities Worldwide)
project in Cornwall to bring high-speed broadband internet access by upgrading 12
telephone exchanges across the county. This investment together with a £10.5m
business support programme will encourage 3,300 businesses to take advantage of
broadband technology.
5.
THE AGENCY’S TARGETS AND PRIORITIES IN THIS
AREA, AND HOW THESE WERE SET
(a)
Tier 2 (3-year Regional Outcome) and Tier 3 (Annual RDA Milestones)
A series of 11 regional outcome targets have been derived from the government’s
targetry framework for all RDAs. These will be measured over a period of 3 years.
The most relevant for this scrutiny are:
Indicator
Tier 2 National Target
Target for the South West of
England 2003-6
1
Sustainable
Economic
Performance
To achieve an annual average
growth of 1.75% by 2005/06
4
Rural
Provide the strategic framework to
improve the sustainable economic
performance of each region, measured by
the trend in growth of GVA per capita,
while also contributing to the broader
quality of life in the region.
Reduce the gap in productivity between
the least well performing quartile of rural
areas and the English median by 2006,
and improve the accessibility of services
for rural people Regenerate vulnerable
market towns as healthy and attractive
centres serving their own population and
that of their rural hinterlands.
6
Employment
8
Productivity
Maintain the region’s employment
rate 1% above the national rate.
Increase the current rate of growth
in the productivity in the South
West to 1.6% by 2005-06.
9
Enterprise
10
Investment
11
Innovation
Work with partners to increase ILO
employment rate over the economic cycle.
Work with regional partners to enable an
increase in productivity measured by
Gross Value Added (GVA) per hour in the
region.
Work with Small Business Service and
others to help build an enterprise society
in which small firms of all kinds thrive
and achieve their potential, with an
increase in the number of people
considering going into business, an
improvement in the overall productivity of
small firms, and more enterprise in
disadvantaged communities.
Make the region an attractive place for
investment to maintain the UK as the
prime location in the EU for foreign direct
investment, particularly by providing
effective
co-ordination
of
inward
investment activities of regional and local
partners.
Make the most of the UK’s science,
engineering and technology by increasing
the level of exploitation of technological
knowledge derived from the science and
engineering base, as demonstrated by a
significant increase in the number of
innovating businesses, of whom a growing
proportion use the science base amongst
other sources of knowledge.
Reduce the gap in productivity
between the least well performing
rural areas and the South West
median by 1% by 2006.
Support the regeneration of 50
market and coastal towns in the
South West.
Increase the proportion of people
surveyed who are considering
going into business by 1%.
Reduce the shortfall in business
formation between the most and
least disadvantaged wards by 1%
per annum.
Achieve 42 RDA and partner
supported investments in 2003/4,
48 in 2004/05 and 52 by 2005/6.1
Increase the number of ‘innovation
active firms’ by 2.5%.
In addition, the most relevant targets that have been set for the purpose of this scrutiny
for core and supplementary annual milestones are the following:
Indicator
2003/04 Forecast
Target
2004/05 Forecast
Target
2005/06 Forecast
Target
Job Opportunities
6,000
6,250
6,500
FDI Job Opportunities
1,500
1,600
1,700
210
220
Business Start-ups
1
2
200
Investments attributable directly to RDA intervention will be 31, 33 and 35 respectively during
2003/06
Indicator
2003/04 Forecast
Target
2004/05 Forecast
Target
2005/06 Forecast
Target
75,000
78,000
Supplementary Indicators
Sq.m of Workspace
50,000
(b)
Priorities
With partners, the RDA has identified six priority areas to be given an increased
emphasis over the 2003-6 Corporate Plan period. The two of significance for this
scrutiny are:
o sectors – maximising the economic potential of our key sectors by improving
productivity, business processes and manufacturing
o innovation and knowledge transfer – encouraging innovation and capturing
more benefit from higher education by improving the links with business and
improving knowledge and technology transfer.
Both of these areas of work are examined in greater depth below.
6.
HOW THE TARGETS AND PRIORITIES WERE REACHED
Targets for business support were primarily driven by the discussions between our
sponsor department, DTI, and the Agency. Key intermediaries in both the public (e.g.
SBS, BLs, Trade Partners UK, Invest UK etc) and private sectors (IoD, Trade
Associations, CBI, FSB etc) were also consulted.
In view of the geography of the region, its economic diversity (both in terms of size
and in terms of sectors of business) and the disparity in economic performance in
GDP terms, our approach is to intervene at a strategic level rather than be involved at
a detailed operational level.
Targets were therefore negotiated to reflect this approach. Our Corporate plan makes
clear:
o the activities that we will invest in
o and the outputs and outcomes that we seek
if a project is to receive funding.
Local stakeholders play a significant role in implementation of policy as we operate
as a strategic organisation that seeks to maximise its impact through developing local
delivery mechanisms and partnerships and leveraging in resource and funding from
those partners to build an effective package of support.
7.
2
HOW WE KEEP BUSINESSES INFORMED ABOUT THE
HELP THE RDA AND ITS PARTNERS CAN PROVIDE,
Forecasts for business start-ups from 2003/4 show a reduction from the previous year’s estimated
outturn, as they have been revised downwards to take account of the agreed definition, which states
that businesses are only counted once they have survived for at least 12 months.
AND THE PERFORMANCE TO DATE OF BUSINESS
LINKS IN THIS AREA
The RDA uses a multi-channel approach in order to reach out to as many businesses
as possible. This includes the following:• Co-ordinated and targeted marketing campaigns;
• Newsletters and periodical reviews. These are targeted using our client
management system where data is kept on all businesses that have expressed an
interest or where we have had contact with them. We also support the regional
BL “Link” magazine that has a print run of 20,000 copies each issue;
• Pro-active use of media opportunities through news and press releases;
• Use of the internet through our own web site. We have recently added a grantfinding tool to the site for businesses to use. We also contribute to the DTI web
tools for small businesses;
• Regular meetings with business organisations and representative groups,
including; FSB, DCBC, IoD, CBI, EEF etc.
• Face to face contact is also important, including: through the aftercare
programme; by pursuing investment opportunities; and via focus groups with
individual companies and trade associations. We also attend events that include
business people and that are relevant to our wider strategies – primarily through
our sector work.
Given that Business Links are the RDA’s main route to the SME market, an
indication of the scale of their interventions might add useful context:
o in 2002/3 the SW BLs supported some 33,000 businesses
o 18% of businesses are currently reached and this will increase to over 20% by
the end of 2003/4, aiming to reach 25% thereafter
o presently, customer satisfaction rates of just under 90% regionally are being
achieved
Each BL has its own marketing team working individually and collectively to
promote business support to their various target markets and increase take-up of the
advice and support available. Each BL has a database of the SMEs in its area and
uses this for targeted and pro-active marketing through a wide variety of
regional/local media.
8.
RESEARCH AND AN EVIDENCE-BASED APPROACH
The RDA regularly reviews the evidence that underpins its interventions in this policy
area.
We are working with other public and private sector partners in establishing the South
West Regional Observatory, which is already delivering intelligence about and
analysis of the region’s economy, especially as it relates to business.
We recently commissioned a major review of the effectiveness of business support in
the region. DTZ Pieda conducted this research and obtained detailed feedback from a
representative sample of businesses that operate in the region (1200 in all). They also
engaged representatives of the stakeholders mentioned above, including the RA. The
report will be published later this month and the findings and conclusions will be
presented to the RA workshop that has been convened for 19 November.
Other recently commissioned or completed research includes:
o a review of our sectoral approach;
o the importance of foreign direct investment to the region and the
appropriateness of the RDA’s approach to it;
o a study into the region’s knowledge base and how this can best be exploited
for economic ends.
9.
HOW OUR PROGRAMMES ARE MANAGED
Regionally significant programmes are managed through focused central teams within
the RDA, the main ones for these purposes being:
o Competitiveness (with separate teams on business growth, business finance
and innovation)
o Sector Development (comprising four teams each responsible for a specific
priority sector).
Spatially based business support programmes are managed through seven area teams,
based on the seven old county structures boundaries of Avon, Cornwall, Devon,
Dorset, Gloucestershire, Somerset & Wiltshire.
The resources available for business support are covered in more detail in response to
Question 9 below.
2.
Related to this is the SW RDA’s rationale for intervention and the
provision of business support – and how this affects provision across the
region, geographically and in terms of the kind of businesses that are
supported (growth businesses, policy toward failing businesses, key sectors). An
understanding of this will help Panel Members gain an insight into the kind of
business support that is provided, by whom and for what reason.
Answer
Some of our interventions are justified because of their overall impact and are not
aimed at one section of the economy. Working closely with the Regional Assembly,
the business community and South West Tourism, we are working to promote a
positive image of the South West internationally, nationally and within the region,
thereby marketing it as a tourist destination and a business location. The aim is to
“expand the market” as a whole, rather than focusing on a particular sector. This
involves the roll out of a new regional brand and identity into appropriate campaigns
to attract funding, people, companies and investment into the South West.
Interventions aimed at the groups of businesses referred to in the question, and at
some others, are discussed below.
1.
GROWTH
There is no single agreed way of defining “growth”, “growth ready” and “high
growth” businesses – all terms in frequent use. The requirements, aspirations and
success criteria for a small growth oriented business in West Cornwall with an
essentially local market will clearly and necessarily differ markedly from those of a
similar sized business located on the M4 corridor with intellectual property rights
capable of rapid international exploitation.
A reasonable definition of high growth businesses is that used by SBS, i.e. those that
have:
o a forecast turnover of £150k within 12 months of providing initial support;
o and the potential to trade outside their immediate locality within 12 months
of support being provided;
o and the potential to achieve a turnover in excess of £1m within 3 years.
Whatever the definitions, targetting tailored and additional support at identified
growth businesses lies at the heart both of the RDA’s strategies and those of
SBS/Business Links in the region. Increasingly, measures are being adopted to:
o systematically identify businesses which would benefit from extra support in
their pursuit of growth;
o track the gross value added to the specific business that is attributable to the
extra support it receives. Benchmarks used include hard financial data such as
increased turnover and profitability.
It is important also to point out that many growth businesses are not start ups but more
mature businesses with the right attitude and aspirations – often summed up as an
appetite for growth on the part of the management.
Support for small growing businesses through incubation and clustering
The incubation and science parks strategy recently published by the RDA provides a
framework for all future investment in incubation and science parks and has clear
definitions and case studies.
The aims of the strategy include developing and enhancing incubation facilities, to be
achieved through the provision of specialist research equipment and facilities. The
incubator approach is a proven tool to stimulate clustering amongst high growth start
up businesses. It provides an ideal climate for growth due to the proximity of highly
relevant expertise (whether in the form of higher education and the research base or
other companies offering opportunities for collaboration), coupled with an integrated
suite of support tailored to the specific needs of small growing businesses.
2.
KEY SECTORS
The primary focus for the Agency’s work is to raise levels of business productivity in
the region’s key economic sectors. We will continue to facilitate and encourage
business-led sector groups to define their strategic objectives and priorities for
improving their overall competitiveness, including skills, innovation and investment.
We continue to work in partnership with SBS and other agencies, institutions and
organisations to determine the strategic areas where the RDA should intervene to
deliver products and services that meet those strategic priorities.
Improvements in business excellence, lean manufacturing excellence and technology
excellence are all key to improving the region’s global competitiveness. In all of this
work, the promotion of sustainable development and the environment as key enablers
of long-term business growth and economic prosperity plays a central role.
In a recent internal re-focusing of effort, the staff resource we devote to sector
development has increased to 20+ people. We have adopted an increasingly
integrated approach that focuses on both indigenous and inward investor businesses
within the sectors that have the greatest potential to increase the region’s economic
prosperity.
In recognition of the fact that sector & cluster development is a key element of our
pursuit of productivity and competitiveness for the region, we have identified five
Economically Important Sectors (EIS).
An EIS is determined as being of economic importance throughout the region in terms
of employment, GDP, or location quotients and those where RDA support for the co-
ordination of strategy and actions at a regional level would have the greatest impact.
We have taken the lead on facilitating the business-led development of these sectors.
The sectors identified are:
o Advanced Engineering (principally Aerospace)
o Food and Drink
o ICT
o Marine
o Tourism.
The region has also identified three Emerging Sectors & Technologies that have the
potential to be of future economic importance to the region and where the RDA, in
partnership with other stakeholders, can realistically affect the sustainable growth of
these sectors. By their very nature, these sectors are rapidly changing. The RDA will
therefore adopt a bespoke approach to sectors in this category with relevant partners
around the region.
The sectors identified to date are:
o Biotechnology
o Environmental Technology
o Creative Industries.
New sectors and enabling technologies are being investigated through research and
Foresight activity.
Examples of RDA activity to date include:Sector support – Food and Drink
With 90,000 jobs and a £3.1 billion contribution to the regional economy, the food
and drink sector is very important to life in the South West. Our food and drink
sector strategy, led by those at the heart of the industry, has already produced results.
With expanded organic production, local food projects and farmers’ markets, regional
branding such as South West Food and Drink, regional sourcing drives, skills
development tailored to the sector and new centres of excellence, this sector has great
potential to drive wider economic growth.
In a two-year project starting in 2001, the RDA provided £400,000 to fund training
and skills development by engaging with a significant number of businesses within
the sector. To date significant outputs have been achieved and verified, including:• the creation of over 500 learning opportunities
• 150 people obtaining NVQ Level 3/4 or equivalent
• nearly 700 Training Needs Analyses completed with SMEs.
Building on this success, a much larger scale project (c. £5m of RDA funding) is now
well advanced to fund the newly created “South West Food & Drink” organisation.
This aims to be a “one stop shop” for businesses in the sector and will undertake a
complementary suite of activity aimed at enhancing the sector’s competitiveness and
productivity.
Sector Support – Advanced Engineering (Aerospace)
A £950,000 programme has been funded by the RDA to support SMEs in their drive
to improve their business performance, focusing on:• Business Excellence
• Technology Excellence
• Lean Manufacturing.
The first phase has seen 30 SMEs engage in the project. This has led on to the
development of a multi-million pound funding proposal for a much more extensive
project led by West of England Aerospace Forum, a business-led industry support
body with a membership of some 700 SMEs. Included within this is £2.7million
towards the cost of a Competitiveness Improvement Programme.
3.
MANUFACTURING
The RDA has sought to offer specific assistance to manufacturing in the region.
We have been a strong advocate for support for this sector of industry and were proactive in the creation of the South West Manufacturing Advisory Service (see case
study in answer to Question 3). This was further confirmed in our policy document
Manufacturing in the South West, published in December 2002. We have committed
£2m+ to SW MAS for 2003/6 with further support to manufacturing being provided
through our sector group initiatives – specifically, advanced engineering (inc.
aerospace), described above.
Manufacturing plays a significant part in four of our five EISs and in two of the three
developing sectors.
4.
FOREIGN DIRECT INVESTMENT (FDI)
Although the Terms of Reference specify that this scrutiny will not focus on FDI, it is
important nevertheless to note that FDI plays a significant role in the South West’s
economy in terms of jobs, profile, exports and contribution to GDP. We have a
number of leading global companies present in the region including Airbus, Honda,
Hewlett Packard, Motorola and Siemens. Despite the downturn in the global
economy, the attraction of FDI still plays a significant role in our strategy - working
with key regional partners and utilising overseas representatives.
Over the past four years we have increasingly focused on potential investment from
companies in our priority sectors (e.g. aerospace, marine technologies, environmental
technologies, creative industries, biotechnology), to provide value-added growth to
the region through high-quality, high-technology jobs.
Our investor support activity concentrates on identified key companies of strategic
importance to the region, which are both UK and foreign owned.
5.
FAILING BUSINESSES
Our business support aims, objectives and priorities are centred on support for
businesses with aspiration and growth potential, rather than those that are failing or
otherwise in crisis.
However, there can be justified exceptions to this. For example, the Foot and Mouth
crisis hit our rural businesses extremely hard, particularly in agriculture and tourism.
We responded by coordinating the support for businesses that were indirectly affected
by the disease. It was the rapid response by the RDA that resulted in the Government
providing extra resource to assist affected businesses. As a consequence we were
asked to represent all RDAs on the Government’s national steering group.
Our role was to represent the region’s interests, making sure that the South West
received, and passed on to affected businesses, extra money to help ease the effects
and to plan for the future. We led a Regional Economic Task Group which coordinated partnership efforts. £14 million was brought into the region, with £11
million being used to directly support some 1,070 businesses. More than 2000 other
businesses received advice and support on planning and restructuring for the future.
A further £3 million was used to support and further develop priority sectors.
On similar lines, we have recently been active in the case of the Appledore
receivership. Our aim is to help the skilled people, the supply base and the assets to
be redeployed as quickly as possible back to productive use.
3. More specifically, it would be helpful to know how the SW RDA is encouraging
other business organisations in the South West to provide support for the key
sectors that have been identified.
Answer
The South West RDA has long recognised the strategic importance of working with
and through others to achieve joint aims. Examples include:South West Manufacturing Advisory Service (SW-MAS)
We were convinced of the need to provide needs-driven support for manufacturing in
the region and to that end we have worked closely with the DTI, SBS, BLs and trade
associations since the concept of the service was first explored in 2000. SW-MAS,
the prime delivery tool for support to this sector in the region, was launched in 2002
and is:•
•
•
•
providing coherent advice and support through a structured diagnostic process –
focusing on manufacturing process and technology issues;
using the manufacturing knowledge base in the region (and in the UK) through a
“hub & spoke” model – engaging with regional Centres of Expertise to address
specific process problems;
signposting diagnosed generic business issues to other providers – in both the
public and private sectors;
supporting the development of networks between manufacturing companies to
spread best practice and to offer mutual support and mentoring.
SW MAS case study 1 – A company in Bristol employing 50 staff involved in a
traditional batch production line was seeking to improve productivity on its key
product line. Following a 2-day diagnostic visit, SW-MAS suggested improvements
to layout, line balancing and waste management to reduce work in progress, stock
levels and floor space use. Improvements in productivity are estimated at between 20
& 30%.
SW MAS case study 2 – A fast-growing SME has identified and exploited a niche in
the student market for cheap computing power. Facing major relocation investment
issues, SW-MAS have been able to suggest improvements to space usage and material
flow that will give the company time to plan its expansion properly.
SW MAS case study 3 – A SME in Wiltshire that supplies rubber as a raw material to
the European market was seeking to improve its competitiveness and productivity by
re-engineering its mixing process. Working with the workforce, SW-MAS identified
improvements that have the potential to improve productivity by 25%.
SW MAS case study 4 – A small company that specialises in the design and build of
bespoke equipment for veterinary use wanted to re-engineer its raw material
procurement and stock control and improve production methods. SW-MAS, working
with the workforce and the MD, was able to identify improvements leading to a
productivity increase of 50% and improved engagement of the workforce in problem
solving.
Business Links support for sectors
All SW BLs are required to set out in their annual Business Plans which sectors they
will support, and how.
Small Business Service looks to them to focus, and to target activity on the RDA’s
priority sectors wherever relevant. There are several specific examples of BL support
for sectors, including that of:
o BLs Devon & Cornwall and Wessex for marine
o and that of BL West for aerospace.
Incubation and Science Park Development – Bristol Science Park
Our incubation and science parks strategy identifies 17 sites which the RDA is
already supporting or plans to support in conjunction with public and private sector
partners including HEIs. A number of these have a focus on specific priority sectors.
In North Bristol for example, in partnership with local universities and industry, we
are committed to developing a science park focusing on the strengths of
biotechnology and digital media within the sub-region.
4. Business start-ups are another important area for consideration. The South
West has been shown to have a comparatively low start up rate, yet has higher
business survival rates for those that do start up. The panel would be grateful for
your thoughts on the reasons for this, what action (if any) is desirable or
is being undertaken to encourage more business start ups in the South West
and what the SW RDA sees as its role in supporting business start ups.
Answer
The reasons underlying business start up, survival and growth are complex. Macroeconomic effects and fluctuations distort the picture. Furthermore, the latest available
official statistics always lag the current position by several years, thus making
judgements about the effectiveness of policy interventions difficult. It is true that
some parts of the region (notably in the far west) experience much reduced levels of
start-up than in the east and north of the region. However, even in areas of significant
start-up activity, business closure rates can be high. This can in part be attributed to
“churn” as one business is naturally succeeded by another, rather than to business
failure in the true sense.
Research has consistently shown that young businesses benefiting from appropriate
help and advice (such as that provided systematically in incubator facilities) survive in
greater numbers over one, two and three years (the periods for which statistics are
collected) than do businesses without such help.
We are currently developing with key partners the region’s strategic priorities for
supporting business start up through our Enterprise Strategy. The BL network has
prime responsibility for this policy area as far as the generic start-up market is
concerned.
We provide support to specific market segments through our interventions in the
provision of incubation, where we have focused on developments such as the Tamar
Science Park, Bristol Enterprise Centre and Exeter Innovation Centre – these have
links to major research facilities, including regional HEIs, and have strong links to
knowledge, technology and invention.
Our developing policy will be informed by a number of factors, including feedback
from the present Enterprise Strategy consultation, the outcome of the current business
support review mentioned in Answer 1, and developments in UK and EU policy in
this area which is increasingly seen as fundamental to securing a vibrant regional
economy.
5. Provision of appropriate workspace is another key topic. It would be helpful in
this instance to have examples of where the market has not been providing and
the SW RDA has intervened. This will allow Panel Members to comprehend the
basis on which the SW RDA steps in, the strategic role it plays in sites and how
the needs of local markets and different sectors of the market are met.
Answer
The Agency’s policy is to support the development of the business incubation
facilities, science parks, workspace and employment land required to support strategic
economic development.
As part of this, we worked with the Assembly to identify and agree the network of
strategic employment sites referred to in Regional Planning Guidance. We are now
cooperating on the collective marketing of these.
We aim to provide appropriate workspace to meet the economic development needs
of the region and throughout the employment growth cycle, linking businesses to
support from the initiatives of the RDA and partners, and looking to maximise the
contribution to sustainable development wherever possible. We prioritise
interventions in areas where private sector development is either not economically
viable, or where the market would act but not in a way that was to the strategic long
term benefit of the region. As a contribution to addressing this issue, our area teams
are currently in the process of developing sub-regional workspace strategies with
partners.
We prioritise land and property developments that support the growth and, where
appropriate, relocation of businesses within the region’s key sectors. Examples
include:
o the development of Osprey Quay at Portland, Dorset which included a marine
industries park and has helped the development of that priority sector
o Plymouth International, which has received over £8.5 million of RDA funding.
It is being developed with a medical industry focus since Derriford Hospital,
The Peninsular Medical School and Tamar Science Park are proving
increasingly attractive to businesses with this advanced engineering focus.
We also intervene in a coordinated way in support of inward investment. Tripos
Receptor Research Ltd is a US-owned high technology company that develops drug
compounds for the life sciences industry, including pharmaceutical, biotechnology
and agrochemical companies. In 2001, the Company was awarded a 4-year contract
by Pfizer to supply sophisticated diagnostic products that required an increase in the
scale of its production facilities. The US parent considered moving the business to an
existing pharmaceutical plant in Berlin or a site in Scandinavia. The South West
RDA and DTI responded by granting a total of £3.7 million towards the £16 million
investment in new premises - construction of which is underway. The investment will
safeguard 82 jobs and create another 146 posts in Bude, of which 100 will be
scientists.
Three further examples illustrate our approach to “joined up” intervention in the area
of incubation and science park development, in which business support services,
provision of space and links to the research base are considered together:
o RDA and partner funding at Exeter Incubation Centre has helped
emerging businesses grow by providing space, equipment, advice and
services which partners and customers find useful.
o With our support, the Tamar Science Park near Plymouth is a great
success, with further work already taking place to meet the huge
demand for space. In addition to supporting the development of the
Peninsular Medical School (which will provide significant
opportunities for the location and growth of medical companies
working in association with the Medical School), a project to develop
an incubation facility at the PMS site in Truro is also being considered.
o Business Incubation South West (BISW). This project is a unique
collaboration between the South West RDA and UK Business
Incubation, the leading representative body for the business
incubation industry in the UK. We and our partners have established a
virtual network that links all incubator facilities in the region with
other centres of excellence within and outside of the region. The key
objective is to share knowledge and expertise in incubation around the
region. Currently membership of BISW is a requirement of South
West RDA funding, and will be open to all those with an interest in
incubation. The network will focus on standards and best practice in
incubation management which will be a resource for each regional
centre. Benefits include:
o Sharing of best practice between incubation facility managers
o Contributing to development of the regional framework for
incubator development
o Establishing standards in incubation to guide future
development in the region
o Exploring options for sharing resources and expertise
o Joint promotional activity celebrating the success of incubation
6. The objectives of the SW RDA on social enterprise and the response of
the SW RDA to the needs of communities in the South West are also significant.
It would be interesting to know what the SW RDA sees as the demand for
social enterprise; how the SW RDA responds to this and how it measures
its success in addressing these regional needs.
Answer
Social Enterprises are important to the economy of the South West as they provide
significant employment and contribute to regeneration in both rural and urban areas,
especially in the most deprived wards. The Regional Economic Strategy and RDA
Corporate Plan Strategic Objective 2: “To increase economic inclusion” recognise the
important role that social enterprises play, particularly in disadvantaged areas.
Through our work (for example, Building Communities, Rural Renaissance and
Market and Coastal Towns initiative) we seek to stimulate demand for social
enterprises. This is in recognition of the benefits not only to the entrepreneur (e.g. by
developing marketable skills) but also to the wider community (e.g. by adding to
sometimes scarce on the job training and employment opportunities and hence
contributing to a more vibrant community). When viewed from this perspective,
success criteria for any intervention clearly have to be broadly drawn, and not limited
purely to financial yardsticks.
Hester’s Way, Cheltenham
The community neighbourhood partnership here identified gaps in service
provision locally which had an adverse effect on the community. With our
financial support they created workspace that is now rented out to health,
social and similar service providers. Thus, social objectives are achieved and
rental income recycled to reinforce the beneficial effect. Interest has been
shown in this exemplar by other communities, including the partnership
aiming to regenerate parts of Bridgwater.
In disadvantaged areas we seek to empower individuals and communities by
facilitating the development of small businesses and social enterprises, not least by
working alongside bodies such as the Development Trust Association to promote the
take up of Government enterprise schemes and the development of community
finance initiatives. In so doing, we take care to respect the differing needs of diverse
communities, avoiding a “one size fits all” approach.
In response to these identified differing needs, the RDA co-sponsored with DTI a
regional workshop aimed at social enterprises that were relatively new. The aim was
to help them understand and, if appropriate, adopt a range of tools that could speed up
and bolster their growth and development.
Subsequently, we committed £1m (2003/6) to enable the establishment of RISE
(Regional Infrastructure for Social Enterprise). RISE is the voice for SW social
enterprise. It will work with partners to ensure that social entrepreneurs can gain
access to high quality information and targeted business advice in order to improve
their enterprise, productivity and contribution to their community and the region. We
will work with RISE to build upon the existing business support infrastructure
including that provided by SBS/Business Links to ensure that there is a more
coordinated approach to improving equality of access to work, training and business
advice.
With regard to the SW BLs, it is worth noting that promoting social enterprise is one
of their priorities and that all BLs are required to address this in their business plans.
BLs are expected both to support BLs as businesses in their own right and also to
work with and through local and regional partners to help improve and build the
capacity of the social enterprise support network/infrastructure.
It is important for the region that the cultural differences between different types of
enterprise are not in themselves a barrier to the achievement of their objectives. The
RDA seeks to embrace all types of enterprise through its sectoral activity, strategy for
enterprise, ICT enablement, encouragement for innovation and provision of finance.
It is important that enterprises have the appropriate skills and resources to enable
viability and sustainability in the long term.
7. Higher Education and Further Education institutions and other research
establishments in the South West play an important role in fostering new ideas.
The Scrutiny Panel is interested in how the SW RDA, with others, is helping
these ideas translate into positive contributions to the economy of the
South West – and how businesses are prioritised for support in developing
and implementing new ideas.
Answer
Our definition of innovation – “the successful exploitation of new ideas” – is
deliberately broad-based and not limited to technical innovation.
Our approach aims to embrace and engage with the region’s science and technology
base in order to extract the maximum economic impact for the region. The RDA
provided very significant funding for the KESW (Knowledge Exploitation South
West) programme promoted by HERDA-SW (Higher Education Regional
Development Association South West) and GOSW, SBS and the RDA sit on the
steering group. The programme is aimed at making better use of the region’s
intellectual capital by developing productive relationships between the key players
involved and SW businesses. SBS has worked closely with HERDA-SW to build
positive links between the KESW advisers and BLs. The SBS also works with BLs
and HE Advisers to help SW businesses access DTI R & D grants.
Other examples of the RDA’s work with HE and FE to date include:Research and Development – South West Materials Centre
We have worked closely with industry and academic institutions to pump-prime the
set up of the £8.7m South West Materials Centre, a specialist facility based in the
universities of Bristol and Exeter. The Centre enables HEIs to assist companies with
all stages of product development from initial concept design and materials
production to final production. The advanced research equipment in material science
combined with the internationally recognised high level of expertise means that the
Exeter and Bristol Universities have jointly become a centre of excellence in this
field.
New Approaches to Sustainability – Filton Econet
Filton College, with significant financial support from the RDA and the European
Social Fund, has pioneered novel ways of helping SMEs to adopt new thinking about
sustainability. It delivers innovative safety, health and environmental support to meet
the needs of small businesses, including audits and mentoring.
Technology Transfer – Bristol Technology Centre
The Bristol University Technology Centre, supported by our funding, gives local
businesses access to advanced research equipment.
Technology Transfer – South West Innovation Relay Centre
The main purpose of this EU/SWRDA funded initiative is to encourage European
trans-national technology transfer and a wide range of activities that support the
innovation and technology transfer process more widely. Additional SW RDA
funding allows the Innovation Advisors to broaden their role to work on technology
transfers within the region, the UK and internationally outside the EU.
Innovation and Best Practice
Inspire SW is a two year £4m EU supported programme which aims to assist
businesses in the South West to become future-orientated and responsive to change.
Core to the initiative are support for science and technology amongst communities
and young people and measures to build understanding of innovation and “foresight”
information within business.
A variety of measures have been developed to promote innovation in the South West,
but most projects prior to Inspire SW aimed to provide innovation support services
with clear, measurable outputs within a short/medium term time scale.
The
Innovative Actions fund provided an opportunity to consider novel approaches to
change the behaviour of regional SMEs that would result in increased demand for
innovation support services provided through other funding regimes, especially in
Objective 1 and 2 areas. The EC requires that 20% of programme delivery is in
Objective 1 areas and a further 15% in Objective 2 areas.
The emphasis of the Inspire SW programme is on testing experimental approaches to
encouraging innovation among regional businesses and organisations and on sharing
the experiences gained with other regions:♦ Action 1 will deliver 4 technology panels in priority sector areas, to encourage
greater take-up of foresight information;
♦ Action 2 works to promote an understanding of innovation and technology
amongst the wider public, students and business and seeks to inspire
businesses to be innovative;
♦ Action 3 is focused on changing business support to encourage :o innovative approaches to all aspects of business planning and
development;
o the take-up of existing innovation support services;
o greater participation in all types of business networks
8.
Business practices that contribute towards sustainable development
objectives and measures encouraging regional and local supply chains
can help many more people and businesses located in the South West benefit from
the region’s strengths.
It would be helpful to know how the SW RDA is
supporting this area of work, with whom, and what the economic value of
these activities is perceived as being. Thoughts on the benefits of the ‘clustering’
of industries and action to support this would also be welcome.
Answer
Supply Chains
The economic value of supply chain and procurement best practice is very
considerable. For example, the public sector alone in the South West spends more
than £1 billion a year on goods and services. We have committed more than
£100,000 to help local and regional businesses win contracts from the public sector,
both within and outside the region. Expert advice is on hand in workshops to
overcome the barriers that have historically prevented these businesses from tendering
for this work.
Supply chain development in the private sector is also of great value. It is a key
economic enabler in improving efficiency and competitiveness and is delivered
through our work in the economically important sectors.
For example, in advanced engineering we have been working with Westland and its
supply chain to drive an approach that now sees over 80% of the value of a typical
helicopter created by its supply chain. The efficiency and innovation gained by this
approach has improved the overall competitiveness of all the businesses. This
partnership approach within the supply chain enables Westland to deliver the right
quality, at the right time and the right price.
Businesses are having to dramatically change the way that they develop new products
as the cost and time involved makes the capital investment risk too great for just one
company. As a consequence, more products have to be developed through
collaborative supplier partnerships that share risks. The increasing market demand for
reductions in time to market, cost of ownership and improved levels of performance
have made it essential for the Westland supply chain to make a huge step-change in
efficiency and performance levels.
The SME supply chain was therefore faced with not only having to improve the basics
of improved delivery times, quality and year on year cost reduction but also having to
move up the value chain, designing and delivering modular units rather than just
components. The RDA used its expertise to act as an ‘honest broker’ between
Westland Helicopters and suppliers, identifying the key aspects of their interrelationship and providing the methodology for continuous improvement plans. We
worked with a critical supplier and identified key delivery performance failure issues.
Working with the supplier resulted in delivery performance improving against target
from 30% to 89% within 6 months. New targets were set to raise performance even
further by achieving a 6-month rolling average of 95% within 12 months. Lead-time
between placing orders and order satisfaction has been reduced to 6 weeks.
Clustering
Support for “clusters” is a priority for the RDA where appropriate on a sub-regional
basis.
An example of our intervention is the Plymouth Marine Science Study. We have
completed the first stage of this, looking at the scope for developing a cluster of
science-related marine businesses building on the academic and research excellence
located in the city.
The Business Incubation South West (BISW) networking initiative is discussed under
“incubation” in the answer to question 5 above. In the longer term, there is support
for a more developed network which, through the intelligent use of ICT, could
ultimately enable a business from any sector to be based in one incubator while
accessing the expertise and experience from another. This would facilitate virtual
clustering, which the RDA believes will become an essential element of the region's
cluster development programme, given the geographic scale of the South West.
9. Finally, it would be helpful to have an assessment of how resources have been
spent to date on business support – in terms of staff resources, programme
expenditure – and the impact any spend has had.
Answer
Financial resources
In the Financial Year 2002/3, direct funding support for business was approximately
£24m, around 19% of the RDA total budget. These figures understate the actual
amount allocated to support for small businesses as they do not take into account the
indirect spend that occurred through other integrated schemes and initiatives.
To gain a more balanced picture of the potential for business support during the next 3
years one needs to refer to the indicative budgets allocated in the current RDA
Corporate Plan.
In this Corporate Plan (the first time we were able properly to reflect the expected
impact of “single pot” funding on this area of work), the first Strategic Objective –
“Raise Business Productivity” - has a projected budget of £142.7m for the period
2003-6 as shown below, equating to 35.7% of the total RDA budget:
Indicative Allocation for Business Support in Corporate Plan
Grand
2003/04
2004/05
2005/06
Total
Strategic Objective 1: To raise business productivity (excludes Skills & Learning)
£142.7m
£44.1m
£47.1m
£51.5m
Staff Resources
These are difficult to calculate precisely, given the integrated nature of our approach.
Relevant staff are located in area, sector development and other central teams. In
addition, senior staff devote significant amounts of their time to business support as
part of their wider duties.
We estimate that on this basis the equivalent of some 50-55 full time posts are
devoted to this policy area.
Impact and achievement of targets
The most relevant of our “core” targets relating to business growth and development
for the purposes of this scrutiny, and the outturn last year, are as follows:
Core Target
Target 02/03
Out-turn 02/03
Jobs created or
safeguarded
Business start-ups
6,450
6,508
Performance
compared to
Target
+1%
500
525
+5%
On the other business-related core targets which are less relevant to the focus of this
scrutiny, performance was 26% over target on learning opportunities and 12% under
target on foreign direct investment jobs - largely due to the effect of 9/11 and SARs
on international investment decisions.
SW RDA
October 2003